Sonic Corp. has set a goal to have 95 percent of its drive-in system franchised by the end of the 2017 fiscal year, the company said Thursday.
“We are excited to announce our intention to move toward an approximately 95-percent franchised system by the end of fiscal year 2017,” said Cliff Hudson, Sonic CEO, in a third-quarter earnings release.
The system of more than 3,500 drive-ins is currently about 90 percent franchised, the company said.
Hudson added in a statement that the sale of company-owned units would “improve the capital efficiency of Sonic Corp. and allow our franchisees to optimize performance of the refranchised stores and expand our brand in the same markets.”
Franchised restaurants showed stronger same-store sales in the third quarter ended May 31, posting a 2.1-percent increase, compared with 0.9 percent at company-owned drive-ins. Same-store sales for the system rose 2 percent.
Hudson said that while consumer trends slowed in April and May, Sonic’s “business performed well during the quarter overall.”
Third-quarter net income fell 20.4 percent, to $15.4 million, or 31 cents a share, from $20.4 million, or 38 cents a share, in the same quarter last year. The company took special items for the extinguishment of debt.
“We are also pleased to have completed our debt transaction during the third quarter, allowing us to maintain a solid capital structure while returning excess cash to shareholders,” Hudson said.
Sonic revenue in the third quarter rose 0.3 percent, to $165.2 million, from $164.7 million the previous year.
Hudson said the brand’s product pipeline remained robust, with recent introductions of such premium products as Frozen Lemonade and Limeade, and Bacon Chili Cheese Coney hot dogs.
“While the consumer environment has weakened, Sonic remains focused on delivering one of the most differentiated customer experiences in the quick-service industry,” he said.
Sonic reiterated its guidance of same-store sales growth in the range of 2 percent to 4 percent, and said it expected 50 to 60 new franchised unit openings for the full fiscal year.